Savage never aimed to transform
The first Labour government was firmly in the political mainstream – just like the current one, argues historian Malcolm McKinnon.
Eighty-five years ago, on November 27, 1935, theNew Zealand Labour Party won a first and historic victory. It was to be in government for the next 14 years, and is still remembered for its achievements, not least in housing and social security.
In a recent opinion piece for Stuff, Bernard Hickey compared that first Labour government with the incoming one of 2020. The former, he wrote, was transformational, the latter is not.
The jury must be out on the 2020 Labour government but, by Hickey’s metric, the first Labour government was not ‘‘intent on a true transformation’’, however much rhetoric since has said otherwise.
To be transformational – and on the left – in the 1930s was to be Marxist or Communist; to advocate the overthrow of capitalism, not its reform. That the Labour Party had abandoned that goal by 1935 is attested by countless statements and policies, many cited in Peter Franks and Jim McAloon’s 2016 centenary history of the party.
Labour’s preoccupation with ‘‘parliamentary activities’’, wrote ‘‘FS’’ to the radical journal Tomorrow in 1935, ‘‘has obscured the socialist objectivewhich is the only reason for its existence’’.
What was transformation if it was not socialism? For Hickey, transformation in 1936meant monetary policy. But the undoubted importance accorded to monetary policy in 1935-36 confirms Labour’s place in the mainstream, not in a radical current.
After the Depression winter of 1932, a broad spectrum of opinion, from chambers of commerce, through manufacturers, farmers, workers, and even the newly founded Woman’s Weekly, rejected austerity and argued for expansion.
There was, however, no agreement on how to expand.
The Depression-era coalition government devalued the currency (so raising farmer incomes) and pursued low interest rates, a competitive labour market, minimal borrowing and a reliance on the private sector to drive a recovery.
Labour’s calls for a reformed monetary system became its way of signalling an alternative policy, a more dramatic expansion, to help the cities as well as the countryside. But it was no more than that.
The point of departure for Labour was not only the oft-cited Liberal premier Richard John Seddon, who had died 30 years earlier, but Joe Ward, Seddon’s colonial treasurer in the 1890s and 1900s, prime minister from 1906-12, who returned to office at the end of 1928 at the head of a United Party government. Ward restored labour conditions weakened by the defeated Reform government and fostered a boom, borrowing for land development, housing and public works (as indeed Reform had).
Bust – and austerity – followed boom, but Ward did not live to see it; he resigned at the end of May 1930 and died six weeks later.
Taking office in 1935, Labour would not borrow overseas as Ward had but, given still high levels of government debt, that was common sense. It nationalised the 18-monthold Reserve Bank but used its credit facility sparingly. Labour financed land development, housing and public works – ‘‘developmentalism’’ in McAloon’swords – from a buoyant tax take and from the government’s own lending departments.
Labour’s state housing was on an unprecedentedly large scale, but it complemented and did not displace a return to state loans for private house building and buying, a staple of 1920s governments.
Social security was a headline achievement in the 1938 election, but John A Lee years later described it as ‘‘no more than a gathering of pensions, compensation, super, family allowance and so on . . .’’ Thatmight have been harsh, but it is a reminder of many precedents, including Reform’s family allowances (1926), and United’s Labour-supported rights-based unemployment policy, introduced at the end of 1930.
Labour planned a nationalised health system but failed to implement it owing to doctor opposition. That attentiveness to a small business lobby – the Medical Association, in this instance – which also characterised pre-Depression governments, played out in other trades too.
Labour protected dentists, chemists and single-store retailers from cut-price dentistry, cut-price pharmaceuticals (Boots, the UK retailer) and chain stores (McKenzie’s, Woolworths) respectively. Guaranteed prices andmarketing for butter and cheese had also been attempted in the 1920s; across-theboard import protection from late 1938 followed these precedents.
Labour’s boom, like Ward’s, collided with economic realities, although it took three years, not one, and the collision took place after an October 1938 election inwhich it won a historic 55.8 per cent of the popular vote (well in advance of the 46.1 per cent it won in 1935).
By thenworld war was on the horizon. As Brian Easton, for one, has noted, Labour’swartime stabilisation policies transformed the New Zealand political economy more than did Labour’s first years in office.
The picture of Michael Joseph Savage behind Jacinda Ardern’s office desk is apposite. If this Labour government is not yet transformational, as that is understood in 2020, neither was the first. As today, it wanted to reform (and restore) not transform; to hold on to power, not languish in opposition.
United had won only 30 per cent of the vote in 1928; it governed with Labour Party support, but Labour had felt cheated by the result. After 1935 it advanced Ward’s policies but did not acknowledge him. A photo of Joe Ward beside that of Michael Joseph Savage would not go amiss.
Savage wanted to reform, not transform; to hold on to power, not languish in opposition.
Malcolm McKinnon wrote The Broken Decade: Prosperity, depression and recovery in New Zealand, 1928-39 (Otago University Press, 2016).